The sweltering pace of Asia’s growth is engorging its elite much faster than it helps the poor, and the region’s development bank says it is high time governments do something about it.<\/p>\n
\u201cAfter 20 years of sterling growth in Asia, which has had dramatic impact in reducing poverty, rising inequality should now be at the top of the public policy agenda,\u201d the Asian Development Bank’s managing director-general, Rajat Nag, said on Monday.<\/p>\n
\u201cYou cannot now be in a state of denial believing that rising inequality won’t ultimately start to compromise the growth story,\u201d the official told reporters in Singapore, ahead of the ADB’s annual meeting next week, in which the issue is set to lead the agenda.<\/p>\n
Inequitable growth isn’t a new problem for Asia. Over the last two decades, the ADB observed rising inequality in 11 of 25 regional economies with comparable data, accounting for 80% of Asia’s population. These include the most populous countries\u2014China, India, and Indonesia\u2014that are also experiencing rapid growth.<\/p>\n
For developing Asian economies as a whole, their Gini coefficient\u2014an income-inequality measure\u2014rose to 0.46 in 2010 from 0.33 in 1990. A reading of zero means income equality, while a reading of one means complete inequality.<\/p>\n
This widening gap between Asia’s wealthy and impoverished\u2014in terms of income, and access to education, labor and healthcare\u2014undermines social cohesion, creates \u201cpressure to take on populist policies that are economically not very wise,\u201d and diminishes the ability of economic growth to reduce poverty, Mr. Nag said.<\/p>\n
Already, the region’s divergent socioeconomic fortunes has led to greater voter anger and social unrest, pushing officials in developing economies like Malaysia, Thailand, and Indonesia to follow efforts by China to boost salaries, in part to head off the spread of the kind of unrest that has toppled Middle Eastern regimes recently, and to calm rising labor actions.<\/p>\n
Even in economically advanced Singapore\u2014now the world leader in \u201cmillionaire density\u201d at 15.5% of all its households\u2014the government has had to step up social spending and roll back its liberal immigration stance, after voters gave the ruling People’s Action Party a relative rebuff\u2014its slimmest-ever general-election win\u2014last May.<\/p>\n
Rising inequality also undercuts policy makers’ ability to fight poverty, Mr. Nag said. Had inequality in Asia remained stable from 1990 to 2010, the region’s rapid growth would have lifted about 240 million more people out of poverty than what turned out to be the case, according to ADB estimates.<\/p>\n
But Mr. Nag insisted that \u201cit’s not a crisis\u201d for Asia, yet. While the overall trend is a worry, \u201cAsian inequality levels are still considerably lower than Latin America’s,\u201d he said.<\/p>\n
The region’s leaders are also more cognizant of the dangers of inequitable growth, according to the official. In an informal survey this year, the ADB found that 65% of the senior Asian policy makers polled had flagged rising inequality as a concern.<\/p>\n
\u201cFor a time, there was a feeling that as long as you have growth, it reduces poverty and you’ll have inequality for a while\u2014the famous Kuznets curve,\u201d Mr. Nag said, referring to American economist Simon Kuznets’ hypothesis that inequality in an economy follows a natural cycle in which it peaks after reaching a certain level of average income.<\/p>\n
\u201cBut countries are realizing that this is not enough, and that you’ve got to do something about it,\u201d he said.<\/p>\n
http:\/\/blogs.wsj.com\/searealtime\/2012\/04\/23\/adb-asias-rising-inequality-a-policy-priority\/<\/p>\n","protected":false},"excerpt":{"rendered":"
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